U.S. Fidelity & Guaranty Co. of Miss. v. Martin


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Docket Number: 2007-CA-00193-SCT
Linked Case(s): 2007-CA-00193-SCT

Supreme Court: Opinion Link
Opinion Date: 10-30-2008
Opinion Author: Graves, J.
Holding: AFFIRMED IN PART; REVERSED AND RENDERED IN PART

Additional Case Information: Topic: Insurance - Ambiguity - JNOV - Prior claim - M.R.E. 401 - Remittitur - Punitive damages
Judge(s) Concurring: Smith, C.J., Waller and Diaz, P.JJ., Carlson, Randolph and Lamar, JJ.
Non Participating Judge(s): Dickinson, J.
Concur in Part, Dissent in Part 1: Easley, J. without separate written opinion.
Procedural History: JNOV; Summary Judgment; Motion for Remittitur
Nature of the Case: CIVIL - INSURANCE

Trial Court: Date of Trial Judgment: 12-20-2006
Appealed from: Lauderdale County Circuit Court
Judge: Robert Bailey
Disposition: The trial court granted USF&G's motion for remittitur and denied the JNOV. The trial court also decreased the jury award under Count I to $25,000 (for a total damage award of $30,299) and denied summary judgment.
Case Number: 04-CV-079B

  Party Name: Attorney Name:   Brief(s) Available:
Appellant: UNITED STATES FIDELITY AND GUARANTY COMPANY OF MISSISSIPPI




J. Wade Sweat; Marisa C. Atkinson



 
  • Appellant #1 Brief
  • Appellant #1 Reply Brief

  • Appellee: DEBBIE MARTIN d/b/a CARTMELL GALLERY AND CARTMELL GALLERY, LTD., LLC Charles W. Wright, Jr.  

    Synopsis provided by:

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    Topic: Insurance - Ambiguity - JNOV - Prior claim - M.R.E. 401 - Remittitur - Punitive damages

    Summary of the Facts: A heavy rain or flood damaged an art gallery owned by Debbie Martin. She and her business partner Greg Cartmell promptly contacted Mike Gardner of Gardner’s Carpet Cleaning and hired him to extract the water from the Gallery and clean the carpets. Prior to the incident, Martin bought an insurance policy for the Gallery from USF&G. Martin filed a claim with USF&G for the damage to the Gallery. Robert Hewitt, a claim specialist for USF&G, sent Martin a letter denying her claim. Martin obtained an expert’s opinion that the Policy provided coverage for her claim and submitted a demand letter to USF&G with the expert opinion letter attached. USF&G denied the claim again. Martin, d/b/a Cartmell Gallery, filed a complaint against USF&G. USF&G filed a motion for summary judgment which the court denied in part. After a trial, the jury returned unanimous verdicts on all three counts submitted for their decision. As to Count I, the jury found for Martin and awarded her $39,329 for damage caused by sewer or drain backup. On Count II, the jury found for Martin and awarded her $2,215 for damage under the fine arts provision of the Policy. As to Count III, the jury found for Martin and awarded her $3,084 for damage under the electronic data processing system provision of the Policy. The total damage award was $44,628. USF&G moved to remit the jury award under Count I, for sewer or drain backup, to $25,000. USF&G also filed a Motion for Judgment Notwithstanding the Verdict and Opposition to Award of Costs. The trial court granted the remittitur and denied the JNOV. The trial court decreased the jury award under Count I to $25,000 (for a total damage award of $30,299). USF&G appeals, and Martin cross-appeals.

    Summary of Opinion Analysis: Issue 1: Ambiguity USF&G argues that the trial court should have granted its motion for summary judgment because the Policy clearly and unambiguously excludes coverage for Martin’s claim. Ambiguities exist when a policy can be logically interpreted in two or more ways, where one logical interpretation provides for coverage. However, ambiguities do not exist simply because two parties disagree over the interpretation of a policy. Taken as a whole, and in the light most favorable to the non-moving party, the relevant portions of the Policy are not clear and unambiguous, and could lead a reasonable person to two interpretations without straining to create ambiguity. First, one could interpret subsection I.A.4.v. regarding sewer or drain backup to fall under the “unless otherwise stated” exception to the general water exclusion in subsection I.C.1.a. Subsection I.A.4.v. does clearly begin with “[w]e will pay for direct physical loss” from sewer or drain backup. Under this interpretation, the Policy covers damage caused by sewer or drain backup despite the overall water exclusion – even in the case of damage from flood, surface water, or overflow of any body of water. On the other hand, one could understand subsection I.C.1.a. to apply to all types of coverage under subsection I.A. whenever certain types of water contributed to the damage. Under this view, the Policy excludes coverage for damage caused by sewer or drain backup if the damage occurred in part because of flood, surface water, or overflow of any body of water. Therefore, the issue of coverage under the Policy needed to be decided by a jury, and the jury was properly given the opportunity to decide this issue. Issue 2: JNOV USF&G argues that the trial court erred in denying its motion for JNOV. USF&G first argues that Martin did not present sufficient evidence to prove that the water damage resulted from sewer or drain backup. However, the record reveals that there was testimony that the Gallery smelled like it had been damaged from sewer backup. Cartmell testified that he and Martin had to replace the carpet in the Gallery. Gardner, the carpet cleaner, testified that there was a strong odor in the Gallery, which he found unusual because it was not normal for carpet to smell the day after a carpet cleaning. Gardner also testified that he used a blacklight to examine the damage to the carpet in the Gallery and the blacklight indicated that bacteria were present wherever the water had been. There was no direct evidence regarding the source of the water that damaged the Gallery. Thus, the record contains substantial evidence on the issue of sewer or drain backup such that a reasonable jury could have reached different conclusions. USF&G also argues that Martin did not present sufficient evidence to prove that she deserved damages under the fine arts provision of the Policy. The record does not contain much testimony regarding Martin’s fine arts claim. Martin testified that some of the items in the Gallery were owned by the Gallery and some had been acquired through a consignment arrangement and belonged to others. The trial court improperly denied USF&G’s motion for JNOV on this issue. The record reveals that there was not “substantial evidence” that most of the items in question qualified for coverage under the Policy. There was only one piece of art that qualifies for coverage, valued at $35. Martin testified that the other pieces of art were inventory and are thus excluded under the Policy as “stock.” Issue 3: Prior claim USF&G argues that the trial court should have allowed it to present evidence of Martin’s flood insurance claim and carpet cleanup from a prior incident. The fact that Gardner considered his cleaning services in 2004 the same as the services he performed in 2003 does not tend to make it less likely that Martin’s gallery was damaged by sewer or drain backup in 2003. Without the information about Martin’s subsequent flood insurance policy with a different insurance company, the fact that Gardner considered the cleaning in 2004 to be the same as in 2003 is completely irrelevant under M.R.E. 401. Even if USF&G had attempted to question Martin about her 2004 flood insurance policy and argued on appeal that it should have been allowed to do so, the link between the invoice and the cause or causes of the 2003 damage remains too tenuous and convoluted. Issue 4: Remittitur Martin argues that the trial court erred when it granted USF&G’s Motion for Remittitur. The Property Coverage Part Declarations form appears to indicate that the maximum coverage for sewer or drain backup under the Policy is $50,000. In addition, the record contains competent evidence in support of the jury award. Martin’s list of damaged items indicates that the approximate amount of damage caused to the Gallery totaled $40,019.44. After adding the amount of damage done to items that were not included in the fine arts and electronics claims (since these are covered in Counts II and III of the jury verdict), Martin suffered $32,132 in general damage to the Gallery. A jury award of $39,329, while approximately $7,000 more than the itemized damage to non-fine arts and non-electronics property, does not demonstrate bias, prejudice, or passion, nor is it against the overwhelming weight of credible evidence. Issue 5: Punitive damages Martin argues that the trial court should have allowed the jury to decide her punitive damages claim for USF&G’s denial of coverage. The trial court found that because the Policy was ambiguous, USF&G had an arguable basis for denying the claim. The trial court also found that there was no showing of malice, gross negligence, or wanton disregard by USF&G. While USF&G may have incorrectly denied Martin’s claim, Martin did not produce any evidence that USF&G’s conduct constituted willful conduct in bad faith.


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